The US economy created 203,000 jobs in November and the jobless rate fell to seven per cent, its lowest level in five years. Global investors cheered the news, despite it increasing the chances of an early end to the US central bank's stimulus program. What does it mean for the global economy? Sheryle Bagwell explains.

Strong jobs data could bring forward the start of Federal Reserve tapering, so why did Wall Street rally on Friday?

Investors are now starting to believe that the US economy can withstand the winding back of US Federal Reserve stimulus.

Last week, the US's September quarter GDP was revised up sharply to a healthy 3.6 annualised, from 2.8 per cent previously.

On Friday, job creation came in above 200,000 for the second month in a row, which in turn is now boosting consumer confidence in the US.

It appears to be a broad recovery in the labour market, for example, some 20,000 new jobs were created in manufacturing last month in the US.

On top of that, it looks like US Congress will reach a Budget deal in the coming days that will get rid of some of the more damaging 'sequester' spending cuts and ensure no more government shutdowns next year.

How soon could the US Federal Reserve begin tapering?

There's still a long way to go for the US economic recovery: the last decent recovery in America saw growth running at four per cent, and job creation at 320,000 a month.

But the time is approaching when the US Federal Reserve will have to start calling time on its extraordinary $83 billion a month in bond purchases.

There is now a 50/50 chance the Fed could begin tapering next week at its December meeting on the 17th and 18th.

Investors seem comfortable with that, particularly given Fed assurances that 'tapering is not tightening'. In other words, US interest rates will remain at near zero even as the bond purchases are wound back.

What effect is this having on global markets?

When growth in the world's largest economy begins to accelerate it immediately benefits the world's largest factory, China.

On Sunday, official data was released showing Chinese exports in November jumped nearly 13 per cent compared to a year ago.

Economists had been expecting growth of around seven per cent.

Much of the boost was due to a big rise in shipments to the US and the European Union, as growth improves and demand for imported goods begins to pick up.

Chinese shipments to the US rose 18 per cent, which is a big jump from October's eight per cent rise.

After 12 years of failed talks to reduce trade barriers known as the Doha rounds, the World Trade Organisation managed to broker its first global trade reform deal in a generation over the weekend in Bali.

Its 159 members agreed to a deal that will see common custom standards set around the world.

Analysts say it could cut global trade costs by 10-15 per cent, adding $US1 trillion to global output, and creating 20 million jobs.

It will take years for those benefits to materialise, but the biggest benefit is that it has resurrected the WTO from its death bed.

Its failure to achieve anything in the past decade has encouraged countries, including Australia, to pursue their own bilateral trade deals, which analysts say are not always in the global good.

Why didn't the Australian dollar fall after the strong US jobs report?

The fact that the Australian currency is holding its ground suggests currency traders don't think tapering is likely to happen until next year.

It may also be buoyed by the strong trade data out of China.

However, it's only a matter of time before the Australian currency weakens with US growth now strengthening.

As the Fed winds down its extraordinary bond purchasing program, the US dollar will rise, which should push down our currency.

One of the few big businesses in Australia which won't benefit from that will unfortunately be Qantas.

That's because a cheaper Australian dollar makes its fuel costs higher, and discourages Australians from flying overseas.

Qantas lost its prized investment grade credit rating last week when Standard and Poor's downgraded it to junk status.

It came a day after CEO Alan Joyce warned that the national airline was headed for a $300 million loss this half, and would have to shed 1,000 jobs as a result.

It all sounds pretty dire for the national carrier, but it actually its not as bad as it seems.

Most airlines in the world, including Virgin, operate with credit ratings below investment grade.

Indeed, a bigger risk now is that Qantas could talk itself into a crisis as it goes cap in hand to the government.

The airline is not about to go under. It has many assets it could sell before that. It also has more than $2 billion in cash on its balance sheet.

But if travellers start to believe the headlines that Qantas is doomed, they won't buy tickets, and that would truly bring on a crisis for the airline.

Why is the Australian sharemarket performing poorly compared to the US?

Weighing down our market compared to the US has been a raft of capital raisings which has drained a lot of money out of our market.

Profit warnings such as the one from Qantas last Thursday haven't helped.

The Australian sharemarket was down 2.5 per cent last week, and is now six per cent below its October highs.

Over the coming week, there could be a few events that will test investor confidence.

On Thursday we get our own labour market report which could see the jobless rate tick up to 5.8 per cent, but economists think we may be near the peak.

The Abbott Government is also set to release the much anticipated mid-year Budget update this week.

Economists think the budget deficit could blow out to around $50 billion, compared to the Treasury forecast before the election of $30 billion.

The biggest reason for that is the government's decision to top up the Reserve Bank's coffers to the tune of $8.8 billion, but there has also likely been a slippage in tax revenue as the economy treads water.